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    Agriculture Loan

    Agricultural loans are any loans that are availed by a farmer to fund seasonal agricultural operations or related activities like animal farming, pisci-culture or purchase of land or agricultural tools. While seasonal agricultural operations routine activities like include preparing and ploughing land for sowing, weeding, and transplantation where necessary, buying inputs such as fertilizers, seeds, insecticides etc. and engaging labour for cultivating and harvesting the crops.

    In addition purchasing of land, or purchasing of agricultural tools, storage of produce and transport also are included under purview of agricultural loans.

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    The agricultural policy of the Government of India also envisages substantial credit flow to increase agricultural production and productivity. Banks provide agricultural term loans to farmers for investment purposes and Short Term Loans for production purposes. There is a need to finance farmers for purchasing land not only to expand their activities but also to make existing small and marginal units economically viable, diversify their present activities and to bring fallow lands and waste lands under cultivation.

    In India, agriculture has been marked as priority sector because farmers constitute a large part of the population. As such agriculture sector qualifies for priority sector lending at lower interest rates by banks. In India, most of the commercial banks, co-op societies and rural banks provide agricultural loans to farmers.

    Documentation Required for Agricultural Loan

    Banks sanction agricultural loans, both long-term and short-term to farmers for agricultural activity. Keeping in view the illiteracy of farmers, the documentation requirement is few. However banks insist on the following documentation for agricultural loans:

    • ID proof-Voter ID, Photo ration card. Aadhar etc
    • Residence proof-Ration card
    • Land ownership proof-records of rights, revenue receipt etc
    • Kisan Credit Card-This is a card issued to all farmers including small and marginal farmers, tenant farmer, share croppers and oral lessees

    Please note that required documents may vary from bank to bank.

    Agricultural Loan Eligibility

    Agricultural loans are extended to all types of farmers such as small and marginal farmers, tenant farmer, share croppers and oral lessees.

    Agricultural Loan Interest Rate

    As per government notification, for crop loans the rate of interest and collateral requirement is as follows:

    On crop loans: For 2013-14, as per Govt of India notification, crop loans worth Rs. 3 lakh or below would carry an interest rate of 7% p.a. For those farmers promptly repaying loans, Govt. of India also provide allows interest subvention of 3% p.a-effectively bringing down interest rate to 4% p.a.

    Crop Loans beyond Rs. 3 Lakh, banks charge interest rate as approved by RBI and other conditions as approved by their Board of Directors.

    As per RBI directive, crop loans till an amount of Rs. 1 lakh require no security. Loans over Rs. 1 lakh may require security as per the lending banks terms and conditions.

    Post-harvest: Post-harvest loan is available to farmers at a concessional rate of 7% with interest rate subvention. For farmers availing post-harvest loan against the negotiable warehouse receipts, the banks may charge interest at commercial rates.

    For land purchase: Banks extend credit for purchase of land within 5 km of the farmers residence at interest rate as determined from time to time. There is no margin for such loans up to Rs 50,000 and amounts higher than this require a margin of 10%. The land is supposed to mortgaged in favour of the Bank and is considered the security.

    How to Calculate EMI for an Agricultural Loan

    With loan EMI calculator, anyone willing to apply for an agricultural loans can fill in a few details like agricultural loan amount required, rate of interest and tenure and can know the exact equal monthly instalment to know how much they would be paying for each month. The EMI calculator also lets you know the schedule of repayment of your agricultural loan-i.e how much is paid, what remains to be paid and the total interest paid.

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    Effects of the Union Budget Meeting 2017-18 on Agriculture Sector

    The Union Budget Meeting for the financial year 2017-2018 was held on the 1st of February, 2017 and was headed by the Finance Minister of India, Arun Jaitley. In the meeting, a lot of importance was given to 10 different sectors of the economy, namely infrastructure, agriculture, health care for the poor and the underprivileged, rural population, youth of the country, financial sector, accountability, fiscal management, tax administration, and public services.

    The Highlights of the Union Budget Meeting 2017-18 on Agriculture are as follows:

    • The Union Budget Meeting 2017-18 stated that farmers should be made to feel safe and secure against natural calamities.
    • The Finance Minister also stated that Rs.10 lakh crore is allocated as credit to farmers in India. These loans will have 60 days interest waiver.
    • The NABARD fund was raised to Rs.40,000 crores which is another main decision that was made in the Union Budget Meeting 2017-18.
    • The government also agreed to set up small labs in Krishi Vigyan Kendras for soil testing.
    • The government will also come up with a model law on contract farming and will share it with all the states in the country.
    • Issuance of soil cards gained attention in the Union Budget Meeting.
    • Dairy processing infrastructure fund will be created with a corpus amount of Rs.2,000.
    • The corpus for irrigation was increased from Rs.20,000 crore to Rs.40,000 crores.
    • With an initial corpus amount of Rs.5,000 crores, a micro irrigation fund will be set up for NABARD.

    Apart from agriculture, lot of changes were made to other sectors of the economy in the Union Budget Meeting 2017-18.


    1. Can loan be availed for purchase of land?

    Yes, banks do extend loans to farmers for purchasing lands. However, banks usually finance purchase of land within a radius of 3 to 5 Kms of their residence or within village boundary.

    2. Who can apply for such land purchase?

    Farmers who own less than 2.5 acres of irrigated land or 5 acres of non-irrigated land, i.e-marginal and small farmers-are eligible to buy land by availing a bank loan. Sharecroppers and tenant farmers can also be covered under the scheme.

    3. Can loans be availed for purchasing land in the name of women?

    Yes, it is possible. As per Govt policy women owning land could lead to their empowerment. Hence, purchase of land in women can be financed and preference can be given to women in distress, SHG members and widows etc.

    4. What are the other allied activities eligible for agricultural loan?

    In addition purchasing of land, or purchasing of agricultural tools, storage of produce and transport also are included under purview of agricultural loans.

    5. How much agricultural loan can be availed without any security?

    To encourage institutional borrowing among farmers, banks have relaxed security or collateral for agricultural loans.

    As per RBI directive, crop loans till an amount of Rs. 1 lakh require no security. Loans over Rs. 1 lakh may require security as per the lending banks terms and conditions.

    Similarly, there is no margin for loans for purchase of land up to Rs 50,000 and amounts higher than this require a margin of 10%. The land is supposed to mortgaged in favour of the Bank and is considered the security.

    News About Agriculture Loan

    • Key takeaways from the Union Budget Announcement for Agriculture Sector

      The union budget presented on Wednesday, chiefly underscored 10 main areas of development namely, agriculture, rural sector, youth, healthcare for poor and underprivileged, demonetization, infrastructure, speedy accountability, public services, fiscal management and tax administration. The Finance minister assured that demonetization will have a positive impact on the economy and the lives of people as a whole. Furthermore, it will result in increased GDP. According to the new budget plan, the fund allocation for NABARD will be increased to Rs.40,000 crores. The change in income tax rate will reduce the tax liability of the working population. As per the revised rates, people with annual income between Rs.2.5 to Rs.5 lakh will have to pay only 5% towards income tax.

      /></p><p><em>3rd February 2016</em></p></div><div class=

    • Agricultural Loan increases by 11% in Gujarat

      According to the State Level Bankers Committee in Gujarat, the agricultural loans have increased to almost 11% in comparison to last year. The loan amount have risen considerably from Rs. 62,081 crores in June last year to an extra addition of around Rs. 7000. Convenor of SLBC Vikramaditya Singh Khichdi said that there is higher chance of rise in the agricultural loans in the last quarter of this year because of the onset of monsoons in July. He also added that with the aid of these loans, the farmers can buy lot of agricultural equipment and other instruments useful in the construction of agriculture infrastructure. This year, Gujarat has seen less rain than before which amounts to about 18% rainfall deficit. But, this has not stopped the farmers to take more loans and cover additional areas as far as sowing of Kharif crops is concerned. The agricultural department revealed that the total area covered has increased from Rs. 85.04 lakh hectare to Rs.86.23 lakh hectare this year.

      /></p><p><em>3rd October 2016</em></p></div><div class=

    • Crop Loan waiver to benefit over 78,000 Farmers

      Crop loans that are outstanding as on 30th June 2016 will be waived in Tamil Nadu. Chief Minister Jayalalithaa had made the promise to waive these loans during the Assembly Election 2016. A function was held at the Maravankudieruppu Primary Agriculture Cooperative Society. The certificates of the waiver to small and marginal farmers were distributed at the event. Rs.2.20 crore of loans were already waived at the PACS. Farmers who had availed crop loans for short and medium terms stand to benefit. The estimated figure of farmers that will benefit from this waiver is 78,669. The total loan amount including interest that will be waived amounts to around Rs.251 crore.

      /></p><p><em>12th September 2016</em></p></div><div class=

    • Agriculture Minister urges Banks to ease Process of availing Crop Loans

      In a move that will make it easier for farmers to get crop loans, agriculture minister, Radha Mohan Singh, has instructed banks to take all necessary measures to streamline and simplify the process of loan approval, so that funds can be provided to farmers in a timely manner. He has also urged banks to make the loan availing process ˜hassle-free by systematizing the documentation process and connecting the mobile banking, Andhra and Jan Dhan. For the current financial year, the government has increased the agricultural credit target from Rs 8.5 lakh crore (2015-2016) to Rs 9 lakh crore. Additionally, farmers can also avail short term loans up to the amount of Rs 3 lakh at a subsidized rate of 7% for a tenure of 1 year. Farmers who repay the loan in a timely manner will be allowed a further subvention of 3 %.

      /></p><p><em>19th July 2016</em></p></div><div class=

    • NOC Requirement Scrapped for Crop Loans

      The Maharashtra state government has effectively scrapped the requirement for obtaining a no objection certificate (NOC) from societies and banks before applying for a fresh crop loan. The move is likely to benefit the larger farmer community in general. Furthermore, the government has done away with stamp duty paid by farmers on mortgage while applying for crop loan. The new schemes have been launched starting from Kelapur Tehsil in Wagda Village from 17th May onwards and more areas will be covered in the coming days. The Bank of Maharashtra and Maharashtra Cooperative Bank have received instruction regarding the same.

      /></p><p><em>20th May 2016</em></p></div><div class=

    • Odisha to Give Farmers Cooperative Loans worth Rs. 6,000 Crore

      The Odisha Government has decided to disburse Rs. 6,000 crore as cooperative loans to farmers for the kharif season. Cooperation secretary Manoj Ahuja wants farmer members of primary agriculture credit cooperative societies (PACS) to receive timely, adequate and hassle-free credit during the 2016 kharif season. Loan targets will be assigned to commercial and regional rural banks at the state-level bankers committee meeting soon. Targets have also been fixed for each district. Pradhan Mantri Fasal Bima Yojana, a new crop insurance scheme, will also be implemented this year.

      /></p><p><em>18th April 2016</em></p></div><div class=

    • Odisha to Receive Rs 8,800 Crore Loans in 2016 Following NABARD Sanctions

      The regional office of the National Bank for Agriculture and Rural Development (NABARD) has officially sanctioned loans worth Rs 8,800 crores in Odisha as state government loans, direct loans and refinance support to banks for the year 2015-2016. A statement released by the regional office, highlighted that Odisha has always been among the biggest beneficiaries of RIDF of NABARD, wherein loans are given to the state government for the setting up and improvement of important and critical rural infrastructure projects such as irrigation, bridges, roads and much more.

      /></p><p><em>12th April 2016</em></p></div><div class=

    • NABARD increases Gujarats Credit Potential by 16% for 2016-17

      National Bank for Agriculture and Rural Development (Nabard) has raised the credit potential of Gujarat by 16 percent to Rs. 1,01,353 crore for the fiscal year 2016-17. The credit potential for 2015-16 has been pegged at Rs. 87,473 crore. Nabards State Focus Paper reported that finance requirement in the priority sector is likely to go up. The proportion of agriculture credit in the 2016-17 projection is expected to be Rs. 65,892 crore. MSME and other priority sector is estimated to need credit of Rs. 23,914 crore and Rs. 11,547 crore, respectively. Nabard has requested banks to maintain a smooth credit flow for investment in the agriculture sector. The sectors requirements are estimated to be Rs. 44,777 crore in crop loans and Rs. 21,115 crore for agricultural term loans.

      /></p><p><em>1st February 2015</em></p></div><div class=

    • The annual credit plan for Bihar is ready

      Nabard- the National Bank for Agriculture and Rural Development has prepared its annual credit plan for Bihar for the financial year 2016-17 after assessing its credit absorption capacity at over Rs. 1 lakh crore. The credit capacity of Bihar for 2016-17 has been assessed for total 38 districts. Based on the states credit potential, Nabard has reserved loan disbursement worth Rs. 61,656 crore which include Rs. 38,191 crore for short-term loans and Rs 23,465 crore for long-term loans. Also, it plans to reserve Rs. 19,084-crore worth of loan for the micro, small and medium enterprise. Likewise, Rs. 6,039 crore would be disbursed for housing sector, Rs. 4,337 crore for infrastructure development, Rs. 3,157 crore for education sector, Rs. 185 crore as export credit and Rs. 429 crore for renewable energy. Besides, the term loan is reserved for Agriculture. The agriculture sector would receive Rs 4,011 crore for dairy activities, Rs. 3,832 crore for farm mechanization, Rs. 2,658 crore for water, Rs. 3,650 crore food processing units and Rs. 3,712 crore for storage facilities.

      /></p><p><em>22nd January 2016</em></p></div><div class=

    • Agricultural bodies seek more allocation and Soft Loans for farmers in Budget 2016-2017

      Budget 2016-2017 might bring good news for farmers. The Finance Minister recently spoke out about the need for better investment and revamping the incentive structure for farmers considering that the agricultural sector is facing quite a lot of distress. The need to increase productivity by leveraging technology for seeds that are high yielding and efficient utilisation of water is one of the main challenges faced by agriculturists. Mandatory crop insurance was also sought for farmers.

      /></p><p><em>06th January 2016</em></p></div><div class=

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